EXHIBIT
10.3

    

    


    
      [Hudson
Bay Fund, L.P.]

    

    


    
      December
24, 2009

    

    FACSIMILE and
FEDEX

    


    General
Steel Holdings, Inc.

    Room
2315, Kuntai International Mansion Building,

    Yi No.
12, Chaoyangmenwai Ave.

    Chaoyang
District, Beijing, China 100020

     

    Gentlemen:

     

    Reference
is made to that certain (i) Warrant issued by General Steel Holdings, Inc. (the
"Company") to the
undersigned with an Issuance Date of December 13, 2007 (the "Existing Warrant") and (ii)
Securities Purchase Agreement, dated as of the date hereof, by and among the
Company and the purchasers identified on the signature pages thereto pursuant to
which the Company shall be issuing Common Stock and warrants for aggregate
consideration of $25 million (the "New
SPA").  Capitalized terms used and not otherwise defined herein
shall have the meanings ascribed to them in the Existing Warrant.

     

    In
consideration of the premises and the agreements herein and for other
consideration, the sufficiency of which is hereby acknowledged, the undersigned
and the Company each hereby agree as follows:

     

    1.           The
undersigned hereby agrees that notwithstanding that whether or not the
application of the antidilution provisions of Section 2(a)(iv) of the Existing
Warrant to the transactions contemplated by the New SPA would result in a lower
Exercise Price and a larger increase in the number of Warrant Shares,
immediately after giving effect to the consummation of the transactions
contemplated by the New SPA, the Exercise Price of the Existing Warrant shall be
adjusted to equal $5.00 and the number of Warrant Shares issuable upon exercise
of the Existing Warrant will be adjusted to equal the product of (i) the number
of Warrant Shares issuable upon exercise of the Existing Warrant immediately
prior to the execution of the New SPA and (ii) 3.3775.

     

    2.           The
undersigned hereby agrees that notwithstanding the provisions of the Existing
Warrant, the undersigned shall not exercise the Existing Warrant (including the
increase in the number of Warrant Shares contemplated in Section 1 above) during
the period beginning on the date hereof and ending on the four month anniversary
of the date hereof.

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    General
Steel Holdings, Inc.

    December
24, 2009

     

    3.           Other
than the adjustments to the Exercise Price and number of Warrant Shares set
forth above solely in connection with the transactions contemplated by the New
SPA and the agreement by the undersigned not to exercise the Warrants during the
period specified in clause 2 above, no terms of the Existing Warrant shall be
changed or modified by this letter agreement in any respect and all of the
remaining terms of the Existing Warrant shall be continue to apply.

     

    4.           The
undersigned hereby undertakes to release 1,500,000 shares of Common Stock of the
Company to Zuo Sheng Yu pursuant to the Amended and Restated Pledge Agreement
dated as of September 18, 2008 by and among Zuo Sheng Yu and The Bank of New
York Mellon, in its capacity as collateral agent.  The undersigned and
the Company further agree to negotiate in good faith a mutually acceptable
agreement that will result in the release of additional collateral shares such
that the value of the collateral shares will represent at all time no less than
twice the principal amount of notes of the Company held by the
undersigned.

     

    5.      This
letter agreement may be executed in any number of counterparts, which together
shall constitute one and the same agreement.  In the event that any
provision of this letter agreement is found to be void or invalid, then such
provision shall be deemed to be severable from the remaining provisions of this
letter agreement, and it shall not affect the validity of the remaining
provisions, which provisions shall be given full effect as if the void or
invalid provision had not been included herein.  The terms and
provisions of this letter agreement shall inure to the benefit of and be binding
upon the heirs, successors and assigns of the parties.  This letter
agreement shall be governed by, and construed in accordance with, the laws of
the State of New York (without giving effect to the conflict of laws principles
thereof).  The courts of the State of New York shall have exclusive
jurisdiction to resolve any and all disputes that may arise under this letter
agreement.  Any amendments or modifications hereto must be executed in
writing by all parties. Each party hereto shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this letter agreement.

     

    Very
truly yours,

     

    
      
        
          
            	
                    HUDSON
      BAY FUND LP

                  
	 
	
                    By: HUDSON
      BAY CAPITAL MANAGEMENT, L.P., 
its
      Investment Manager  Partner

                  
	 
      	 
      
	
                    By: 

                  	
                        

                  
	 
      	
                    Name:  
      Yoav Roth

                    Title:    Principal
      and Portfolio
Manager

                  


          

        

      

    

     

    Acknowledged
and Agreed as of this 
24th day of December, 2009

     

    
      
        	
                GENERAL
      STEEL HOLDINGS, INC.

              
	 
      	 
      
	
                By: 

              	
                   

              
	 
      	
                Name:

                Title: